Medicaid can affect a property inheritance

By
Guy Halverson /
September 10, 2001

Q I own my house, and my daughter lives with me. I'm in my 80s. She's in her late 40s. Should I have the house recorded in my name only (as it now is), in both of our names, or in her name only? I'm concerned that if I have to be hospitalized or placed in a nursing home for any length of time, I would have to go on Medicare, and the [government] would get the house. My daughter would then have no place to live.

A Current federal rules say that if you give away property up to three years before going on Medicaid - not Medicare - the government can "recapture" the property, even if it has been willed away, says Paula Hogan, of Hogan Financial Management, in Milwaukee.

Ms. Hogan, who often deals with older clients, says you need to immediately go to an estate attorney who deals with elder care issues in California. Draw up a plan that would give the property to your daughter, while preserving your rights to collect both federal and state assistance.

Q We are retired. All of our investments were in securities. They went down in value some time ago, so we shifted to money-market funds, certificates of deposit, and other safe places. Our Social Security is minimal, less than $900 a month. I also invested in three mutual funds. One of the funds has done well, but two have lost up to a third of their value. I also put $25,000 in a money-market account. Should we keep hanging in there with the two losing mutual funds, and wait for the market to recover? Or should I close them out and put the money in a safe investment, even though we would really take a loss? We have about seven months left in our money market fund for monthly expenses.

P.D., Oceanside, Calif.

A "Take out half the money in the two losing mutual funds and shift the assets over to a good balanced fund, such as the American Balanced Fund," says Tim Shmidl, with Prism Group, in Overland Park, Kan. "Don't wait any longer for the market to recover for those funds."

Let the money percolate in the balanced fund, and at the end of seven months, start taking systematic withdrawals from the balanced fund, he says. If you don't need the money for expenses, you could always reinvest it.